Zcash Developers Want to End a $300 Million Dev Fund Early. Does That Make ZEC More Valuable?

Josh Swihart, who originally designed the funding model for Zcash (CRYPTO: ZEC), proposed on October 30, 2026, to close the Zcash Dev Fund ahead of its scheduled expiration in November 2028. The Dev Fund receives 20% of every block reward, and Swihart noted that, following ZEC’s price surge, the two funding reserves are now valued at over $300 million.

Swihart’s proposal responds to an earlier suggestion by Maxime Desalle posted on October 26. Desalle’s proposal aims to end only the 8% portion allocated to Zcash Community Grants (ZCG), redirecting those funds to the Network Sustainability Mechanism (NSM). This reserve would temporarily hold ZEC and release it later as block rewards. Both proposals are still under discussion in the community forums, meaning no changes to Zcash’s code have been made yet.

ZEC is trading at $1,281, reflecting a 4.8% increase over the past 24 hours and a 7.9% rise over the last week. Despite this uptick, ZEC remains down 3.7% over the past month and is 59.9% below its peak price of $3,192 from October 2016.

The announcement did not prompt a surge in buying interest, as evidenced by a $4.6 million outflow from Grayscale’s Zcash ETF (NYSEARCA:ZCSH) on October 30, the same day Swihart made his proposal. An outflow indicates that more investors sold shares than bought.

What a Fifth of Every Zcash Block Pays For

Zcash is a privacy-oriented cryptocurrency that operates on a proof-of-work system, meaning miners generate new blocks and receive ZEC as rewards. Swihart highlighted that since Zcash launched, 20% of each block reward has supported development, split between the coinholder fund, which takes 12%, and ZCG, which receives 8%.

The coinholder fund enables coinholders to vote quarterly on retroactive grants for completed work, while ZCG pays upfront for work not yet done. Under the existing rules, these payments will cease around November 2028, after which 100% of the block rewards will go directly to miners.

Both funds rely on newly issued ZEC, so their dollar values fluctuate with the coin’s price. Swihart’s $300 million figure refers to the total value of both reserves based on ZEC’s current price, not accounting for any outstanding grants. Desalle’s plan would allow ZCG to continue funding approved work before directing any remaining funds to the NSM.

The discussion also ties into Zcash’s upcoming NU7 upgrade, with Desalle’s proposal addressing the subsequent NU8 upgrade. Therefore, any changes to the Dev Fund would likely be at least one upgrade away.

Who Gets New ZEC When the Grants End?

Ending the Dev Fund would change who receives new ZEC, but the overall supply of coins created would remain unchanged. If the closure mirrors the planned schedule, the 20% designated for grants would instead go to miners. This shift could undermine the idea that ending grants would reduce selling pressure on ZEC.

Miners often sell their newly mined coins to cover electricity and hardware costs, making it likely that any coins shifted from the grants to miners would still hit exchanges in a similar manner. Meanwhile, grant recipients frequently sell funds to manage salaries, suggesting the selling pressure on the market might stay relatively constant.

Desalle’s plan presents a different scenario as the NSM would temporarily hold coins out of circulation. According to Desalle, the NSM will start distributing its reserves in February 2031 based on the latest governance vote. If ZCG’s 8% is transferred to the NSM, those coins would stay off the market for several years. Thus, Desalle’s proposal could influence the supply dynamics more significantly.

Do Swihart and Desalle Gain From Their Own Proposals?

Desalle disclosed a connection to Cypherpunk, which is the largest Zcash mining operation, and miners are the group that eventually collects NSM payments. He characterizes his proposal as a personal initiative and has canceled his own ZCG grant prior to receiving payment.

Meanwhile, Swihart’s motivations are also relevant, since he was once the CEO of Electric Coin Company. While he argues that new, privately funded teams are emerging and funding is no longer scarce, his push for a closure would not cost privately funded teams anything but would take away the public money that smaller independent developers compete for.

Swihart and Desalle both leave ZEC’s market price out of their proposals. Swihart emphasizes the importance of governance and warns about the risk of large entities potentially influencing coinholder votes.

Will Ending the Dev Fund Increase ZEC’s Value?

Swihart’s full shutdown of the Dev Fund is unlikely to directly increase ZEC’s market value. If successful, it would merely reroute the same amount of new coins to miners, who would also need to sell. While this shift could enhance governance by removing control over funds worth over $300 million, it doesn’t necessarily correlate with an increase in the cryptocurrency’s worth.

Desalle’s NSM plan could change supply by holding back 8% of new coins until February 2031, but ZEC climbed 55.0% over 60 days while the Dev Fund kept paying, which suggests buying demand has set the price more than grant selling has. If a ZIP, a formal Zcash Improvement Proposal, sends the coins to the NSM in NU8, supply does change, so does the Zcash Dev Fund shutdown make ZEC more valuable?

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